More Economy Talk

A recent blog in Channel Insider talks about the lagging performance of the tech distributors and how the overall economy may be impacting the IT sector.

Consider this possibility before you read this blog and pull all your money out of the bank and hide it underneath your server. Is it possible that while lackluster consumer confidence may be going through a difficult time right now, that the reason MSPs are not experiencing very much slow down (I am actually hearing the opposite that MSPs are experiencing greater demand from consumers) is because clients understand that with a managed services provider helping out with their IT management their overall IT spend will be much more stable and predictable?

I think this is exactly why MSPs are in many ways insulated from whatever may be happening in the rest of the economy. Now, I don't like to see the distributors facing hard times, but please do not think that poor hardware sales means hard times for MSPs.

My gut tells me that clients just want their MSPs to maintain the network status quo until this economy turns around, and then all those projects that have been put on hold for the last 6 months will get the green light again.

What do you guys think?

MSPs Immune to Recession?

Finally, some independent analysis to support what all of you have been reporting over the last 3-4 months. Essentially, the work from the MSPs has been business is good, despite a potentially troubled economy which may or may not be limited to the real estate sector.

This TechWorld article talks about Internet sales remaining unharmed by the rest of the US and global economies. I have always believed the next economic downturn would actually provide the MSPs with an opportunity to shine. Of all the MSPs I talk to, nobody is saying they are having trouble finding qualified clients. In fact, it is the opposite. MSPs have plenty of incoming leads. If anything, they are having logistical issues in keeping up with demand but this is a natural problem and something that can be resolved.

So, let's here from all of you whether you think this article is correct: is the existing economy hampering your business at all?

Mobile Madness

I've been saying for a long time that the mobile smart phone represents an emerging threat to corporate network security. Well, it appears that the end-user is realizing this threat as well.

In a recent Wall Street Journal blog the potential problems of losing your smart phone (or having it stolen) are explored. While the specifics of this blog may be fantastical to some of you, it should underscore the need for every MSP (who offers such a service) to discuss with their clients how to safeguard their corporate intellectual property, beginning with one of the smallest devices on the network!

Just curious, how many MSPs out there currently have a smart phone management offering for clients?

What MSPs really want from their vendors

Well, it's that time of year again. The MSPAlliance Managed Services State of the Market Report has just been released and as per usual, there are some things that we need to publicly discuss as a community.

Most notably, when asked to rank the vendors with the best MSP programs, 40% of the MSPs stated that no vendor had a good MSP program. When I first read this I was kind of shocked. I thought that the MSPs were having a meltdown of sorts. Then, after thinking about this I called up a few members and asked them what they thought of this data point and what they said really made sense.

10 years ago MSPs had very little information accessible to them about managed services. What little they did have they had to work very hard to get. Back then, having a vendor who could spend resources on education and training (not core to their product) made a big difference.

Today, there is so much information about managed services, whether a public blog (like this), associations, trade groups, workshops, events, etc., that a vendor with a MSP resource center is really no big deal. So, this begs the question of what role should the vendors play in the MSP universe.

If you want my opinion, MSPs just want technology that works. They want their vendors to start focusing on their technology again. Vendors are facing greater competition, even the MSP platform market is getting crowded. Vendors need to spend their resources on creating technology that works and getting these new features to their partners faster. In turn, this will help the MSPs provide greater value to their clients.

So, I don't think the vendors are creating bad MSP programs, I just think they need to shift their attention back to what they do best: create cutting edge technology MSPs can use! What do you guys think?

IT Recession? Really?

If I read one more article that talks about the IT industry outlook in a pessimistic way I'm going to really lose it. Everybody I talk to in the IT industry today is struggling to keep up. And not the type of struggle because they can't find work. I'm getting reports of massive consumer adoption and the only difficulty is in finding qualified people to keep up with demand.

Keep that in mind next time you read one of these naysayers. Or, maybe I'm crazy. What are you guys seeing out there?

Commodity vs. Managed Service

For years I have been saying that the one strength MSPs have is their insulation from commoditization. Now, it is sometimes frustrating to hear young MSPs talk about how they are facing increased "commodity" pressure from outside forces. However, "I would rather light a candle than curse their darkness" (to quote from Raising Arizona). Most of these companies are still equating their situation to when they were merely a break/fix VAR. I am deeply saddened when I see young MSPs not realizing the full potential they have as a MSP. I hope this blog helps in some small way.

This article talks about the VoIP market becoming more of a commodity. In and of itself, this is not a surprising thing. There are many products/solutions that have emerged in the last 5 years that are now becoming "commoditized", as defined by a significant down shift in their pricing along with continued widespread adoption. Anti-virus, spyware, patch management, storage, and many more solutions MSPs deliver are dropping in price. Most VARs (and some MSPs) will look at this article and think that yet another lucrative way of making money is vanishing.

May I suggest an alternative way of looking at this issue? Just because a product or solution is decreasing in price does not mean that it is useless. For example, a friend of mine who practices law has a template he uses for drafting Service Level Agreements. This template is the quintessential commodity. It is a standard document that he could give away to anyone. Is he concerned with his legal practice becoming a commodity and losing his perceived value to his clients? Absolutely not!

He knows that the template is completely useless without his legal expertise. He could give this document away and it would be of little or no use to a MSP without his advice on how it should be edited and customized to each MSP client. Now, put yourself in this person's shoes. Imagine each of your clients getting anti-virus, spyware, VoIP, storage/archiving solutions (which they probably already get today). Are you gonig to give up and say that you have no role to play since all these solutions are a commodity and have little room for resale?

No! Have faith in yourself and realize that your value is NOT in the reselling of these comodity products/solutions, but rather in the services YOU wrap around these products! If you understand this concept, you are well on your way to becoming a profitable MSP.

Endangered species

I was walking around town and found this store front rather amusing. Now, I must confess that the vendor PC manufacturer listed was not the reason for me taking the picture. The "Value-Added Reseller" moniker was what really caught my attention. It was the first time I have ever seen a company actually use that term in front of the public.

Now, my previous blogs and misgivings about the future of the "VAR" aside, I have atually done business with these folks and must say they are very nice. As to whether or not they realize that their business model is coming to an end, who can say. I just thought it was funny.

The Race to the Top

At the Atlanta MSPAlliance Summit a few weeks ago there was a lot of discussion around this concept of a "race to the bottom". Basically, this idea is that by letting various market pressures bear down on the MSP profession, the MSPs will eventually drop their prices and find themselves in a downward spiral towards commoditization and ultimately extinction.

Now, there are some people out there who may be under the false belief that the MSPAlliance believes this is going to happen. Let me be the first to tell you (I actually said this many years ago) that the MSPs must do everything in their power to avoid this race to the bottom. I say the race to the top is where we need to go. I'm going to keep making this analogy until it sinks to every MSP executive; other professions do not spend their days worrying about falling prices and commoditization of their profession. Lawyers do not spend sleepless nights contemplating a reduction in their hourly rates. They provide a valuable service and they charge appropriately for it (sometimes too appropriately).

The point is, MSPs need to take a page from these other professions and stop worrying about price wars. If the large vendors are cutting prices on their direct managed services offerings, then you should spend your time telling your clients why you are different from those large vendors. Take pride in your profession and never let anyone, least of all a vendor trying to compete with you, tell you that you are a commodity!

The New Vendor-MSP Paradigm

After listening to a lot of the discussions from the Atlanta managed services summit it is apparent to me that there are a lot of MSPs concerned with "competition" from the large vendors. While my position in the MSP profession obligates me to support and defend the rights of all MSPs around the world, I am beginning to change my position with regards to the role of vendors as MSPs. Allow me to explain my thinking.

The rationale many vendors give for why they develop a managed services offering tends to go along the following lines: we developed our product, therefore, we are the best suited to manage it. Now, this is a very practical and logical statement. Far be it for me to dispute that companies like Microsoft, Oracle, Cisco, or even Dell, are well situated to support and even manage their own products.

Now, if we are all in agreement as to these previous statements, then the next important question is what is the proper role of the channel (i.e., MSPs) when it comes to working with these vendors. This question, admittedly is a difficult one to answer. My crystal ball, such as it is, becomes less clear when I try and figure exactly how the MSPs will interact with those vendors that do decide to offer their own managed services; the crystal ball is downright opaque when it comes to those vendors delivering their own managed services to the end-user in direct competition with the MSP. However, I am surprisingly calm when I contemplate the role of MSPs in this new channel world of the future. The reason for my serenity is my knowledge that MSPs are vendor agnostic (as opposed to some VARs) and therefore uniquely situated to serve a function that no vendor can play.

I have always believed, primarily because that is what I have always been told (by MSPs), that MSPs represent the end-user client, and not the vendor. MSPs will always serve the interests of the client and as long as they do they will own the relationship. Now, if a vendor says buy my product and I will manage it maybe the MSP will be cut out of that relationship. I don't think that is the case but time will tell. What I firmly believe, however, is that in the long term the MSP will be triumphant as a champion of the client.

Imagine going to a product or software vendor and asking them to recommend the best product or solution. Of course they will say "use my product". What if the client simply wants a couple of options so they can come to their own decision? Do they go to the vendor? Probably not. Simply put, if I went to a drug company and asked them to recommend a pill for my ailment I have no doubt they would suggest their own brand. Thank goodness we have doctors!

SaaS vs. MSP

I can't believe I'm writing this but I'm actually going to come to the defense of a vendor…almost. In a recent eWeek Channel Insider article the question is asked whether Microsoft is harming the IT channel by its latest string of software as a service offerings. This is a great question to ask but the answer I will give may surprise some of you.

Years ago, back when managed services wasn't nearly as popular as it is today, I used to be asked about the difference between ASP and MSP. This was a natural question to ask and one that I became quite adept at answering. ASP is a methodology for delivering an application. Managed services is about managing IT, which may or may not involve applications. For the sake of argument, let's assume that SaaS is nothing more than the old ASP model rebranded.
Now, I am full aware that SaaS is getting a lot of press today and I'm not going to weigh in on SaaS as a business model. However, I will say that SaaS is nothing more than a licensing model for software applications; it is not necessarily managed services! Microsoft being the ultimate software manufacturer, it makes perfect sense for them to embrace the SaaS model. Which brings us to the premise of the article which is, does Microsoft offering its application via a SaaS model harm the channel? My answer is no.

To suggest that the IT channel, MSPs in specific, will be negatively impacted by Microsoft's SaaS aspirations fundamentally underestimates what it is to be a MSP. Where the data resides, who has access to it, how it is managed, and many other important questions are all issues MSP's face on a daily basis. Microsoft, I am guessing, does not want to get into that type of relationship with the client. Microsoft, and I am merely hypothesizing here, simply wants to expedite the process of getting their software into the hands of the end-user; SaaS certainly seems like the best way to accomplish this task.

To be more blunt, there will likely be many "SOHO" clients who will benefit greatly from Microsoft's hosted application strategy. However, my guess is that the majority of businesses above the SOHO level still want to use Microsoft products but also want the advice and counsel of their MSP as well.